Beware of credit card chargebacks this holiday season


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If you’ve purchased a good or service using a credit card and never received it, or if the item arrived damaged, then you may be eligible for a chargeback. A credit card chargeback is when a bank reverses an electronic payment to trigger a dispute resolution process.

Read on to learn more about what is a credit card chargeback, how it works, and when you may be able to request one.

What Is a Credit Chargeback?

Credit card chargebacks usually occur between a merchant and a credit card issuing bank. Chargebacks are used to reverse a payment after a billing error, unauthorized credit card use, or the failure to deliver a product or service. You can also request a chargeback when the goods or services that you paid for with your credit card you received aren’t delivered as advertised.


For example, if you ordered a red jacket, and you received a blue one, you could request a chargeback if the merchant refuses to exchange or refund your purchase.


Chargebacks can be initiated for almost any merchant that accepts credit card payments.

Credit Card Chargeback vs. Refund

While both a chargeback and a refund can result in you getting your money back, they aren’t the same thing. Knowing the difference is an important part of understanding how credit cards work.


With a refund, it’s the merchant rather than the consumer that initiates the return of funds. Additionally, while the consumer deals with the merchant to get a refund, it’s the credit card issuing bank you’ll work within a credit card chargeback.

How Does a Credit Charge Back Work?

If you have an issue with a product or service you received, or you notice a charge on your credit card statement that you don’t believe was authorized, you can initiate a credit card chargeback. Note that you can only make a chargeback within 120 days of the date of purchase.


Once you’ve contacted the credit card issuer to dispute the charge, the bank will take over the process and contact the merchant. The merchant will have the opportunity to either accept or refute the chargeback, and you may be asked to provide evidence supporting your request.


At the end of the investigation, the chargeback will either be accepted, in which case you’d get your funds back, or it will be rejected. If you disagree with the decision, you can always continue to dispute the charge through a process called arbitration.

When to Use a Chargeback

The Federal Trade Commission (FTC) provides protections to consumers who use credit cards, including the right to accurate billing, protection from unauthorized charges, and the right to dispute credit card charges for goods or services that are different than described. As such, chargebacks are issued for a variety of reasons.

Before proceeding, however, keep in mind that if there was an issue with your service or goods, you may consider giving the merchant the opportunity to make it right before requesting a chargeback.

Fraud or Unauthorized Use

A common reason to request a credit card chargeback is due to fraud or unauthorized use. If you don’t recognize a transaction on your credit card statement or believe someone used your card without your authorization, you may consider requesting a credit card chargeback.


Moving forward, a good way to prevent credit card fraud can be to keep your credit card expiration date and CVV number on a credit card safe.

Incorrect Amount

If an amount on your credit card bill is incorrect, you can file for a chargeback. For example, if the merchant adds an extra zero to your bill and you can’t reach the company to have it corrected, then this would be a good time to request a chargeback — especially if the overcharge has pushed you close to your credit limit.

Recurring Billing Was Not Stopped

If you cancel a subscription service but continue to be billed afterwards, a chargeback can make sense. It can help if you have proof in hand that you had canceled the subscription already.

Goods and Services Not Delivered

Paying for a good or service that you never received is another reason to file a chargeback. If you order something that never arrives and are unable to get the company to send it or give you a refund, then filing a chargeback may be your best course of action. After all, you don’t want to potentially pay interest on something you never received, even if you do have a good APR for a credit card.

Goods or Services Were Not as Described

If you receive a good or service that was substantially different from what was described or agreed to, you can file a chargeback for the cost of that good or service. For example, if you paid to have work done on your house, but it was done incorrectly and the service provider refused to fix it, then you could request a chargeback.


However, remember that the merchant will get the opportunity to prove that the services were provided as described.

Return Credit Not Processed

If you returned an item or canceled a service within a merchant’s return policy but never received credit for the return, such as a refund, you can file a chargeback with your credit card. This can help you recoup the funds you were owed (plus any credit card interest that may have accrued in the meantime).

How to Submit a Chargeback

1. Contact Your Bank or Card Issuer

To submit a chargeback, you first initiate the process with your bank or card issuer, often through its website. Some card issuer websites allow you to initiate or process most disputes entirely online. Otherwise, you can call your card issuer to file the chargeback or request a chargeback by mail.

2. Receive Confirmation of Your Request

After you’ve submitted the chargeback request, your bank will provide written confirmation of your request. They will then either post a temporary credit to your account to cover the disputed amount or pause required payments and APR on a credit card on the disputed amount while the issue is being investigated.

3. Sit Back and Wait While Your Request Is Submitted to the Merchant

Next, the bank will submit your chargeback request to the merchant. The merchant has a certain amount of time to respond to the bank’s inquiry.


During the investigation, make sure that you continue to pay your credit card bill for the remaining charges. At the least, make sure that you’re making the credit card minimum payment. Otherwise, you’ll end up paying interest on the non-disputed charges.

4. Receive a Decision

If the chargeback is accepted by the merchant, your billing dispute will be closed and your bank will provide an account credit to cover the disputed charge. However, if the merchant rejects the chargeback request, your bank will evaluate the information and make a decision, which they will notify you about in writing. If you disagree with the bank’s decision, you can dispute your bank’s decision through the bank’s dispute resolution process.

The Takeaway

Credit card chargebacks allow you to dispute a charge on your credit card. You can initiate a chargeback from a variety of reasons, such as fraud or unauthorized use, being billed for an incorrect amount, or encountering a situation where goods or services either aren’t delivered or aren’t provided as described. To start the process, you’ll contact your credit card issuer, and they will then reach out to the merchant. All of this is important information to be aware of whether you’re planning to apply for a credit card.


What happens when you submit a chargeback?

When you submit a chargeback, you initiate the process with your bank. The bank contacts the merchant for the request, and the merchant decides whether to accept or reject the chargeback request.

Does a chargeback hurt your credit?

A chargeback doesn’t hurt your credit in itself, but any unpaid credit card bill during the dispute process could temporarily impact your credit score. If the disputed charge or charges are large and comprise a significant portion of your credit limit, this could also negatively affect your credit score temporarily, since your credit utilization ratio will be high.

Are chargebacks always successful?

Chargeback requests are not always successful. The merchant can respond that the charge is valid and provide documentation to support the claim. In this case, the credit card issuer may deny your request for a credit card chargeback.

How much is the chargeback fee?

A chargeback fee only applies to the merchant, not to the customer. If your business has a chargeback ratio of less than 1%, the chargeback fee usually varies between $15 and $100. Businesses with more chargebacks will face higher fees.

Is it worth fighting a chargeback?

Whether it’s worth fighting a chargeback depends on a variety of factors and will vary from person to person. Consider the amount in question, the time it may take, and the reason for the chargeback request. It’s also a good idea to contact the merchant first to give them a chance to correct the problem before requesting a chargeback.


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This article originally appeared on and was syndicated by


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6 ways to prevent holiday debt


Because holiday gifts aren’t always a line item in a budget, it’s easy to see why last-minute purchases can end up on a credit card. And while it’s tempting, it’s best if you can avoid doing this at all costs (unless you can pay off the balance in full). Here are six ways to prevent holiday debt — and still celebrate and honor the season.

“If you’re not able to pay your credit card debt off at the end of that month, you’re financing gifts to people,” says Michael Bovee, co-founder of Resolve and a debt relief expert with more than 20 years of experience. “That’s never a good financial move. So only spend what you can afford.”

And while we know that can be tough advice to follow, we have tips to help you do it without feeling the pinch.


Deagreez / istockphoto


If it’s too late for this year, resolve to make better financial decisions for the holidays next year. How? Start planning from the outset. “Start at the beginning of the year for your holiday spending and have a budget for it that you put money into throughout the year,” Bovee says. “It’s no different than you making those purchases in November and having to pay for them for the next six months. Except all the gifts that you buy then are more expensive after the holidays as soon as the bill comes, because you’re paying interest.”

Make a list of everyone you anticipate buying a gift for and set a budget of how much you can spend, then sock away the money slowly throughout the year. By making it part of your monthly budget, you’ll be prepared financially by the time the holidays roll around and will be less likely to overspend and get into holiday debt..


GeorgeRudy / istockphoto


Gift-buying is only one part of holiday spending. If you travel for the holidays or host family or friends, you’re looking at bigger expenses for travel, food and potentially accommodations. Account for all of that in your budget when you’re factoring in how much you’ll need to get through the holiday season debt-free. Plus, planning ahead in this category can help you cut travel costs in a big way. Set up flight trackers early if you know you’ll be traveling to visit family or friends for the holidays, so can pounce on cheap flights as soon as you see them.


SolisImages / istockphoto


If you have your budget and a list of gift items from January, you’ll be in a better position to take advantage of sales long before the holidays. If, say, a gift you want for your sister is deeply discounted during Memorial Day promotions, pull from the money you have earmarked for gifts to buy it for less.


These days, there are so many ways to get discount codes for online shopping. Whether that’s signing up for a brand’s newsletter, Googling for coupons, or using programs like Honey (a free browser extension that automatically applies coupon codes when you shop on specific sites), make it a rule to always search for a coupon before making any online or in-store purchase. Odds are, you’ll be able to save something, even if that’s simply shipping fees, but we suspect you’ll find deeper discounts if you do a little digging.



Just say no to holiday debt. Setting a holiday spending budget is only as good as your ability to follow through. It’s one thing to say you’re capping holiday spending at $300 this year, but if you don’t tally up those receipts as you make purchases, you could blow past your self-imposed limit without even noticing. Use a money-tracking app or spreadsheet to make sure you’re staying on target. (Check out, which has different downloadable budget spreadsheet templates to choose from.) Then stop when you hit either the total number of gifts you need or your upper spending limit. Challenge yourself to come in under budget. And remember: You don’t have to spend every penny budgeted!





Separate a good gift from the price tag. There’s no rule that says you have to spend money on someone’s gift. “Can you give your time?” Bovee asks. “I would fall over flat if one of my daughters showed up at my door saying, ‘Dad, I’m here to wash your car. It’s your Christmas gift.’ There are so many ways to give. My wife is a crafter, so at times where we’ve had tighter budgets, she would make a lot of things, and she’s super good at it. Ask yourself: How can I not spend and still give something to someone that is valued by them? People will surprise themselves by what they’re able to create.”

This article originally appeared on Resolve and was syndicated by


Featured Image Credit: Tatsiana Volkava / iStock.